Magazine Article | March 3, 2014

Paul Stoffels Expands The Janssen Legacy

Speaking with Paul Stoffels is like continuing a long-ago conversation with the late Paul Janssen. A generation younger than the original Janssen company founder, Stoffels now has responsibilities similar to his former boss and mentor, but for a much bigger and more complex company now under the Janssen name.

Stoffels is the chief scientific officer of Johnson & Johnson and worldwide chairman for the Pharmaceutical Companies of Johnson & Johnson, now called Janssen. He was also the young student-colleague of Dr. Janssen and made a name for himself in the early 1990s leading breakthrough research in HIV drug resistance and drug development, starting on the path Janssen had discovered.

Stoffels joined Janssen in 1992, about the same time I last visited the company headquarters in Beerse, Belgium. I had met and interviewed Paul Janssen several years previously, an occasion I shall never forget. Visiting him at his lair in Beerse was a pilgrimage of sorts — to the place that produced more significant new-drug introductions at the time than any other company in the world, by a large margin.

Stoffels’ story parallels Janssen’s in several respects. He entered medicine in much the same way as Janssen, as a young physician-researcher in the Democratic Republic of the Congo, the former Belgian colony in Africa. He came back home to Belgium determined to fight a disease then still widely perceived as a threat only to third-world or minority populations. To that end, he used the basic method he had learned from Paul Janssen: Investigate the chemical interaction of drug molecules with the disease agent. Specifically, in the case of HIV, Stoffels turned to looking at how the virus adapts to drugs that block its replication by inhibiting reverse transcriptase.

Thus, Stoffels serves as a direct human connection from the original Janssen company to the new Janssen, the large, global J&J pharma organization he now runs. As did Janssen, Stoffels works alongside a cochair, now Joaquin Duato, who heads the commercial end of the pharma group as worldwide chairman of Janssen. Stoffels is officially chairman overseeing the R&D, business development, and global commercial strategy for pharmaceuticals, but CSO of all Johnson & Johnson. Also as it was in the original company, it is the R&D organization that sets the agenda and direction for all subsequent business and commercial activity at the contemporary Janssen group.

Yet a meaningful difference also exists: Janssen was still a relatively small, regional company when it joined J&J more than three decades ago; today, the legacy Stoffels oversees has expanded to include a huge group of global R&D and commercial organizations.

DOWN TO BUSINESS

We organized ourselves very much in the biotechnology way but completely focused on certain therapeutic areas.

Paul Stoffels

The story would be less interesting if Stoffels had simply stayed with Janssen his entire career. Instead, the search for more effective ways to treat HIV infection took him into entrepreneurial territory. In 1994, he cofounded two companies to carry on the quest: Virco, to phenotype all the viral strains found in patients, and Tibotec, to develop new drugs that would defeat drug-resistant strains. Tibotec’s name stems from the type of molecules his team at Janssen had thus far tried and failed to move forward, the TIBOs (i.e. tetrahydro-imidazo[4,5,1-jk][1,4]-benzodiazepine- 2(1H)-one and –thione). Viral resistance to earlier drugs had defeated trials of the first TIBOs tested at Janssen.

“I learned from Paul Janssen how failures help you come to the solution,” says Stoffels. “As we worked on HIV, the first drug failed, the second drug failed, the third drug failed, and for only one reason — we did not understand yet how the virus behaved in the body. When we started to do experiments in vitro, we learned that the virus, after a few days of exposure to the drugs, became resistant. That gave me the idea that we should start testing patients to see the subsets of HIV they carried.”

Stoffels began by setting up a diagnostic effort at Janssen to find the multiresistant strains, and eventually the effort produced some drug candidates. After Janssen retired in 1991, however, Stoffels decided to take his research outside of the company, leading to the startup of Tibotec and Virco. The business grew quickly, attracting widespread attention and capital from the start.

“We raised a significant amount of money, and in a short time we went from being five people in a garage with an incubator and two office tables to a significant biotech company of about 350 people. My business partner, Dr. Rudi Pauwels, was an extremely good basic scientist and biologist, a brilliant guy who did everything in the laboratory and discovery, and I did everything in drug development and business.”

After the FDA observed that the Tibotec- Virco group had the technology for learning about multiresistant HIV strains and finding drugs to fight them, Stoffels says pharma companies and researchers beat a path to its door. “We built a vast network of hospitals and pharmaceutical companies. We also built and investigated a library of more than 10,000 strains of viruses, and we used the resulting knowledge to advise physicians on how to treat patients and companies on how to develop HIV drugs.” Tibotec’s own discovery and development efforts eventually yielded two new drugs, Prezista (darunavir) in 2006 and Intelence (etravirine) in 2007.

Stoffels had put Tibotec together as an integrated pharmaceutical group to develop the new drugs, but when the market crashed in 2002, he could no longer raise the money to fund the needed Phase 2b trials, so he and Pauwels began to look for a partner. By then, there were many candidates, but they chose to go back home to Janssen and J&J because, says Stoffels, “J&J was prepared to leave us alone as a small company in the group, and we could continue to do our work.”

By the time Stoffels rejoined J&J/Janssen, however, he had become as much a businessman and lawyer as a scientist. “I trained myself, and was trained by lawyers, in contract negotiation and writing. I sat in on acquisitions, worked with analysts, did the tour of analysts in New York, gave a hundred presentations in two weeks trying to go public — all of it part of growing up as a biotech CEO and chairman.” (Stoffels was chairman of Tibotec and CEO of Virco; Pauwels played the opposite roles at the two companies.)

Once back in the J&J fold, and after Stoffels saw the first two HIV drugs off to market, J&J’s senior management asked him to take on more responsibility for a larger part of the R&D group. Then, in 2009, he became head of the entire group in the position he now holds. As he puts it, “I applied all my capabilities learned during my lifetime in biotech and pharma, and I started working on the pharmaceutical R&D company of the future.”

INTEGRATING CAPABILITIES: ONE JANSSEN FOR ALL
The Janssen twin-chairman structure reflects the company’s “unmet medical need and best science-first” strategy — looking for business opportunities where scientific understanding reveals them, as the best way to meet a major medical need, to paraphrase Stoffels. He says his responsibility as CSO for all of R&D gives him access to early science and technology, including the discoveries and developments of the alliances managed by the company’s “external innovation” organization. That group is an “integrated team,” operating globally, with regional headquarters in San Francisco, Boston, London, and Shanghai, “on the front line where the majority of company innovations happen.”

The external innovation group includes teams for running business development, legal, finance, IP, and all other capabilities needed to establish and maintain collaborations with other companies. Stoffels also oversees the business development group responsible for accessing late-stage science and technology through licensing and acquisitions, the company’s own venture capital group, which invests in earlystage technology, along with Janssen labs, an incubator that assists small start-ups, now numbering about 50 companies.

More than just imposing the Janssen name on former units such as Centocor and Ortho Biotech, the company has aimed at making its technologies, proficiencies, and special knowledge available throughout the Janssen universe. Under Stoffels’ direction, the current Janssen units cooperate on discovery and development in all five therapeutic areas of focus: cardiovascular and metabolic diseases, immunology, infectious diseases, neuroscience, and oncology. In addition to Janssen units, the company fully funds a number of “internal ventures,” and other ventures such as the alternative-scaffold enterprise Centyrex.

Has all the reorganizing and integrating of R&D paid off for Janssen? Stoffels believes the reforms have succeeded by many measures, including an increase in the actual productivity of the R&D organization. “We organized ourselves very much in the biotechnology way, but completely focused on certain therapeutic areas. And, like every biotech company knows, to be successful you must have the top experts leading the disease or therapeutic area. They need to make all the important decisions about which science or type of development we adopt.”

On the other hand, he says, an organization that develops a high number of new drugs must be efficient on a global basis. “Because we have worked on significant unmet medical needs, we have learned how to speed up the process.”

For example, Stoffels cites the development of Imbruvica (ibrutinib), with Pharmacyclics. The FDA halted the drug’s pivotal Phase 3 trial, in chronic lymphocytic leukemia and small lymphocytic lymphoma, when its interim analysis showed significant PFS (progressionfree survival) and OS (overall survival) improvement. “We brought the drug from early Phase 2a to the market for the first indication for MCL [Mantle cell lymphoma] in only 23 months,” he says. “That is only possible if you have an outstanding global development organization that can develop and file medicines globally, in Europe, the United States, Japan, and all the rest of the world.”

He caps the point by mentioning the company’s first-ever success in launching a new drug initially in Japan: the NS3/4A protease inhibitor Olysio (simeprevir), for the treatment of chronic hepatitis C infection. “The global system really works. In drug development, we say do it high speed, do it high quality, and do it global. That’s one of the most important value creators. Don’t be inhibited by where the science comes from, internal or external. Just make sure you win access to the best possible drug, with the best possible science. That was a big change for this organization — not that easy in the beginning but now everyone is fully embracing it.”

Recently, J&J announced Janssen’s pipeline produced 13 new-drug launches since 2009, “more than doubling its productivity over the past four years.” The company anticipates submitting more than 10 new product filings and more than 25 “significant brand-line extensions” by 2017. Five of its new-drug indications now have FDA breakthrough status. New products launched since 2009 accounted for 17 percent of total pharmaceutical sales in 2012, up from 9 percent in 2011, and the company expects the same products to bring in nearly half of the total sales in the segment by 2017.

THREAD FROM THE PAST, PATTERN FOR THE FUTURE
Although the most sanguine pharma executives don’t like healthcare costcutting any more than anyone else, they may be quicker to recognize the challenge, shrug their shoulders, and move on. Stoffels quickly turns a question about pressures on the industry into a view of positive solutions.

“The answer to economic pressure is innovation. If you bring innovative new drugs into the market, society will be prepared to pay for it. We need to produce more and more significant innovation to be reimbursed by the payors in the world. It is a scientific, technical, and global development challenge to develop the best drugs, pick up the best technology, and make sure that we have the best profit margin possible.”

Stoffels sees great promise in the direction of pharma science and technology, such as the growing understanding of the human genome, disease pathways, immunology, and personalized medicine. “With new biomarkers coming on line, we probably will be able to diagnose much better who will respond best to therapy. That means we have to develop drugs and diagnostics together — on one hand, a burden; on the other hand, an opportunity.”

Janssen has an expansive armamentarium, far beyond what even Paul Janssen could ever have imagined. Within the set therapeutic areas, the company can now aim to use all therapeutic tools available in its kit: small molecules, biotechnology, and vaccines — its three “centers of excellence” serving the entire Janssen organization. Janssen Diagnostics develops biomarkers and tests, to be used either independently or in companion diagnostics.

“The melding of all our capabilities is already in place,” Stoffels says. “But no organization is ever at its end-stage. We must always continue to think about how we can improve. And when we fail, we learn how to succeed. We learn from all things, but especially from our failures.”

Earlier, Stoffels used the phrase “pharmaceutical company of the future,” so I asked him to elaborate. “The pharmaceutical company of the future is one which is having strong internal science, combined with a vast network of collaboration in the world. It is a global company, which can execute fast global development, combining all types of technologies with a single objective — improving the quality and length of life — and that is the metric which, in the end, results in a good business outcome. It also produces extreme motivation in the organization, and that’s also a very significant part of the success.”

For a glimpse of the present and future Janssen, Stoffels refers once more to the past: “Paul Janssen looked his whole life for a TB drug, one effective against multiresistant strains. I carried on the search with my team and said, ‘Let’s get this done.’ And we found a spectacular new drug for TB.” Launched in late 2012, the TB drug Sirturo (bedaquiline) has a new mechanism of action, inhibiting mycobacterial ATP [adenosine 5’-triphosphate] synthase. “Nobody ever believed ATP inhibition would be a drug target at all,” he says.

Stoffels says the Sirturo story is emblematic of the expanding Janssen legacy. “The character of the organization and the heart and soul of the organization have been carried on through the years and through the ages. We still have many people who worked with Dr. Paul. We have added our own flavor to that, of course, going into the new age of biotechnology and so forth, but it is still all about making a difference for patients, and it works. It is what Dr. Janssen did the first 50 years of the company, and I believe it will continue to be our strategy for the next 50 years.”

Based on how I have seen the company grow and develop during most of its past years, Stoffels may be right about its future. I doubt, at the least, Paul Janssen would disagree.